Accrued Severance Benefits

12 Months Ended

Dec. 31, 2017

11. Accrued Severance Benefits

The majority of accrued severance benefits are for employees in the Company’s Korean subsidiary. Pursuant to the Employee Retirement Benefit Security Act of Korea, eligible employees and executive officers with one or more years of service are entitled to severance benefits upon the termination of their employment based on their length of service and rate of pay. As of December 31, 2017, 98% of all employees of the Company were eligible for severance benefits.

Changes in accrued severance benefits are as follows (in thousands):


	Year Ended December 31,
	2017			2016
Beginning balance	$	130,144		$	135,160
Provisions		24,373			14,432
Severance payments		(21,506	)		(15,352	)
Translation adjustments		16,785			(4,096	)

		149,796			130,144
Less: Cumulative contributions to the National Pension Fund		(259	)		(276	)
Group severance insurance plan		(632	)		(643	)

Accrued severance benefits, net	$	148,905		$	129,225

The severance benefits funded through the Company’s National Pension Fund and group severance insurance plan will be used exclusively for payment of severance benefits to eligible employees. These amounts have been deducted from the accrued severance benefit balance.

The Company is liable to pay the following future benefits to its non-executive employees upon their normal retirement age (in thousands):


	Severance Benefit
2018	$	—
2019		610
2020		1,094
2021		1,573
2022		1,584
2023 – 2027		20,541

The above amounts were determined based on the non-executive employees’ current salary rates and the number of service years that will be accumulated upon their retirement dates. These amounts do not include amounts that might be paid to non-executive employees that will cease working with the Company before their normal retirement ages.

The above table reflects an effect of a mandatory extension of retirement age in Korea from 57 to 60 under the Employment Promotion for the Aged Act effective from the beginning of 2016.